Dynamic analysis of subsidies for reducing farmers' grain storage losses

Abstract

Large grain stocks held by rural households make reducing on-farm storage losses essential for strengthening food security. However, in the absence of government support, farmers lack sufficient incentives to invest in improved storage practices. To address this issue, this study adopted a dynamic perspective to construct and analyze three types of subsidy policies: the grain price subsidy, a new storage tool subsidy, and a hybrid subsidy combining both subsidies. Optimal control theory was employed to evaluate the effectiveness of each subsidy strategy. The results showed that all three subsidy types improve farmers' income and grain quality, with the hybrid subsidy outperforming the single-subsidy schemes in overall performance, particularly in achieving higher income gains, better grain quality, and more effective loss reduction. Specifically, the new storage tool subsidy showed greater effectiveness in improving grain quality, while the price subsidy contributed more significantly to increasing farmers' income. Furthermore, under high rates of grain quality degradation, the marginal benefits of all subsidies in improving quality declined markedly, indicating that the effectiveness of subsidy policies varies under different conditions.